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Petrocaribe Days Are Over!

Petrocaribe will roll no more, well at least for now. That is the general sentiment that General Manager of Alba PetroCaribe Belize Energy Limited, John Mencias shared with stakeholders.  Alba PetroCaribe has decided to suspend all purchases of petroleum products from Petróleos de Venezuela, PDVSA, under the PetroCaribe Agreement with immediate effect. This decision was made after Mencias and his team met with Government officials, and officials from Trafigura/PUMA and PDVSA. So what triggered the suspension? Well according to Mencias, PDVSA has been unreliable. Mencias tells stakeholders that since the beginning of 2017, they have been quote, “encountering a number of problems with maintaining a reliable supply of products from PDVSA. This has, among other things, resulted in much higher unit costs of freight when Puma has been forced to make last-minute arrangements to truck products overland and when vessels are brought in half-loaded.” End of quote. In fact, according to Mencias, PDVSA has been having trouble itself. He writes quote, “We have also been informed by PDVSA that, at times, they have had to purchase on the spot market to meet their commitments to us: This is definitely not what was intended by the PetroCaribe program.” End of quote. Stakeholders will meet later this month to determine the way forward. They will discuss the possibility of resuming supply from PDVSA in the near future. And while the suspension is in effect, PUMA has already made alternative arrangements to maintain an uninterrupted supply of petroleum products to Belize.Reports coming out of Venezuela are that no commercial lender is willing to lend to a company that has been in arrears like PDVSA. Like the country, PDVSA is facing cash-flow problems. It needs to pay or refinance approximately $4 billion this year. According to reports so far, PDVSA continues to pay its bondholders cash on the barrelhead, which explains why 80 percent of them buy back bonds when they expire. The company tries to maintain the illusion of a good financial situation, but this, according to online reports, is misleading. According to reports, the company is running out of cash. It keeps repaying bondholders in order not to cut off the Venezuelan government’s financing flow but it is already unable to pay the foreign oil field services companies on which it relies.